U.S. President Trump Contests Subsidies towards Canada: Special Analysis Indicates Discrepancies in Financial Figures
Talking Trump and Carney: The Real Story Behind US-Canada "Subsidies"
Prime Minister Mark Carney of Canada found himself in hot water during a recent meeting with President Donald Trump when the latter rehashed an old accusation - that the U.S. is shelling out a whopping $200 billion to Canada every year. Let's set the record straight.
Donald Trump's Million-Dollar Mistake
Trump's claim that the U.S. subsidizes Canada to the tune of $200 billion a year is a wild exaggeration, to say the least. Economists and data show that this figure is far from accurate. So where did Trump get this misinformation from?
The True Picture
Trump's $200 billion figure is usually based on the U.S.'s trade deficit with Canada and higher military spending, including expenditures related to NORAD. However, even the most generous estimates don't even come close to Trump's inflated number.
In 2024, the U.S. deficit with Canada for both goods and services was $35.661 billion. For just goods, the deficit was anywhere between $63.336 billion to $70.603 billion.
The White House estimated the goods and services deficit with Canada at $53.5 billion, which is closer to the figure from 2022 - $57.565 billion.
Not So Fast
Economists argue that describing a trade deficit as a subsidy is incorrect. Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, said, "That's never been the definition of a subsidy, a subsidy is defined as a gift without any compensation in return. So whatever the number is, the concept is way off base."
Military Musings
The White House also pointed to the military spending of both nations and the percentage of their GDPs that goes towards defense. This seems to be a reference to NATO's investment guideline, where member countries agreed in 2006 to commit to spending a minimum 2% of their GDP on their own defense.
In 2024, Canada spent $29.3 billion on defense, amounting to 1.3% of its GDP. On the other hand, the U.S., 13 times bigger than Canada, spent $997 billion on defense, or 3.4% of its GDP, exceeding the NATO guideline.
The Cosmic Burden
Regarding NORAD, the White House claimed that the U.S. covers about 60% of the bill. However, there is no publicly available data on NORAD spending in the U.S. or Canada. The 60% figure presumably refers to a 1985 cost-sharing agreement for the operations and support of NORAD's North Warning System that is still in place today.
In conclusion, Trump's claim was inaccurate, and the real numbers don't come close to his hyperbolic statements. Nonetheless, there is room for improvement in Canadian defense spending, as acknowledged by defense experts.
Bonus Read
- Trade Deficit: Myth or Reality?
- History of NORAD: A Look Back
- The Evolution of NATO: A Timeline
Find AP Fact Checks here: https://apnews.com/APFactCheck
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